What is a Purchase Contract?
When you decide to buy a home after seeing others and comparing it to them, your Realtor will probably pull out a stack of papers and lean against her car to write up “a contract” or will invite you to her office where it will be all written and ready to sign. (The tech-friendly Realtors of today - like us - might just discuss your down payment and other aspects of the contract with you over the phone and email you a pdf version of the Residential Purchase Agreement.)
The job of this eight-paged tome is to identify all the details of the escrow: the most important being how much you intend paying for the property, how much of a good faith deposit you will have and when it will be delievered to the title company, which title company you prefer to use, and in general who will pay what - title, escrow, closing costs, cash back and so on.
This contract is then sent to the seller for approval. Usually they will send a counter back and then once you and the seller reach an agreement in writing, these contracts become legally binding and escrow proceeds according to what has been written. The title company will process the transaction and the funds according to the Residential Purchase Agreement.
Further changes to the contract can be made but must be written and approved by both parties on an addendum.
